NJ Rate Counsel Urges State to Move Ahead With Offshore Wind Project

The New Jersey Division of Rate Counsel is once again urging the state to accept a proposal to build an offshore wind farm three miles from Atlantic City, a project state regulators balked at approving earlier this summer.

In a brief filed with the state Board of Public Utilities, the director of the division argued that the agency should approve the 25-megawatt pilot project developed by Fishermen’s Atlantic City Windfarm, LLC, the first offshore wind proposal to come up for review in the state.

Arguing against a number of positions taken by the BPU in July, Rate Counsel Director Stefanie Brand contended in an 18-page brief filed with the agency that the project complies with a three-year-old law aimed at promoting the development of offshore wind farms along the Jersey coast.

The stance taken by the division marks a reversal of an earlier position it took in the proceeding, in which it essentially argued the project was too expensive for ratepayers to be approved by the state. Now, thanks to a stipulated agreement with the developer, the division affirms that the project satisfies a "net benefits" test established by the law.

“Through this stipulation, Rate Counsel and the company have negotiated a settlement that presents the best feasible terms for a viable project,’’ according to the brief. Still, the division said it recognized that the $180 million project will cost a substantial amount over time and that the BPU is not required by the statute to approve any offshore wind project.

The state’s Energy Master Plan seeks to develop 1,100 megawatts of offshore wind along the Jersey coast by 2020, a target that is unlikely to be met given a host of regulatory, permitting, and financing issues.

Fishermen’s Energy did not reply to a call for comment on the latest brief filed by the division.

For the BPU, the problem raised by the Atlantic City project is one of financial integrity. In rejecting the stipulation reached between the Division of Rate Counsel and Fishermen’s Energy, the agency cited a provision in the settlement that it argued would saddle ratepayers with another $19.2 million in costs above and beyond what they will pay for the electricity produced by the wind farm, if federal incentives fall short of expectations.

But in its rate counsel argued that the project has “a reasonably good chance’’ at receiving a grant from the U.S. Department of Energy. Only six other offshore wind projects are eligible to divvy up as much as $47 million in the second phase of the program, with three of them virtually having little chance of securing the funding, according to the brief.

Those funds, the division noted, would result in a savings to utility ratepayers, who will help finance the offshore wind farms, of more than $50 million. Compared with the developer’s original proposal, ratepayers would save $136 million, the brief said.

“If the settlement is approved, New Jersey will be able to move forward with its energy policy goals of developing offshore wind at a . . . price that is significantly lower than what was proposed at the onset of this proceeding,’’ the brief noted.

The proposed offshore wind farm initiatives are a particularly contentious issue in New Jersey. Some environmental groups strongly support the effort as a cleaner way of producing electricity, while some business interests would like to quash such plans, fearing the projects could spike already steep energy bills.

Most lawmakers, however, view the effort as helping to jumpstart a new green economy in New Jersey, a step that they hope will create many well-paying manufacturing jobs for residents.